Don't ask "what if Google builds this?"

The quality of questions asked matters when evaluating a startup. Here’s what experienced investors ask during a pitch.

Hi, this is?Weekend Fund ! Welcome to the 3rd edition of Signature Block, a newsletter for fund managers. To access the full archive of articles and get the latest in your inbox, visit?signatureblock.co .

VCs are professionals at asking questions. The questions experienced investors ask to evaluate companies have been trained on a “data set” of thousands of pitches, and refined over years and sometimes decades of investing.

Yet, unless you’re the founder pitching, few investors get visibility into the questions experienced VCs ask and?why?they ask them. In this post, we’ve compiled 35+ questions fourteen experienced investors ask in pitch meetings.

If you only have a few minutes, here are four main takeaways about asking questions in pitch meetings:?

• The best pitch meetings aren’t rapid-fire interviews, they’re collaborative discussions.?Founders and investors are looking to learn from each other, and a collaborative setting where they’re able to engage in a two-way dialogue gives both sides the opportunity to do so. As an investor, your goal is to create a space that surfaces truths outside of the founder’s “script”.
• Pitches are opportunities to start building a relationship with the founder.?The goal of a pitch is to evaluate if you want to invest in a company, but it’s also an opportunity to start building a potentially long-term relationship with the founder (even if no investment is made). Investors that leave a positive impression are more likely to receive updates, another look at the company in the future or deal flow from the founder.
• Not just what founders say, but how they communicate is important.?The best founders are able to communicate clearly to different audiences, and clear communication is critical for fundraising, recruiting, selling, and almost every aspect of building a successful startup.
• A founder saying “I don’t know” is a sign of strength.?Founders being honest about what they don’t know instills confidence in what they say they do know (h/t Jonathon Triest, Ludlow Ventures). Additionally, founders acknowledging unknowns can be an opportunity for them to stay in touch and follow up with "You asked me about X. We thought about it, experimented and learned…". The best founders continuously test, learn and de-risk unknowns over time.?

Shout out to Alok Vasudev ?(Standard Crypto), Ankur Nagpal ?(Vibe Capital),? Arjun Sethi ?(Tribe Capital), Elizabeth Yin ?(Hustle Fund), James Currier ?(NFX),? Jonathon Triest ?(Ludlow Ventures), Karine Hsu ?(Slope Fund), Kevin Carter ?(Night Capital), Lenny Rachitsky ?(angel investor), Sarah Smith ?(angel investor) and Sheel Mohnot ?(BTV) for contributing.?

Founders, team, and backstory?

Learning to identify great founders is key to making good startup investments. As Paul Graham?says , “Succeeding in a startup is, in the most literal sense, extraordinary, so we’re looking for people able to do extraordinary things.”?

Identifying extraordinary founders requires asking the right questions (unless you have a previous relationship with them).

The ideas founders choose to work on and how they navigate “the idea maze” can provide additional signal. Here’s Balaji Srinivasan on?how good founders navigate “the idea maze” :?

“A good founder is capable of anticipating which turns lead to treasure and which lead to certain death. A bad founder is just running to the entrance of (say) the “movies/music/filesharing/P2P” maze or the “photosharing” maze without any sense for the history of the industry, the players in the maze, the casualties of the past, and the technologies that are likely to move walls and change assumptions.”?

Questions to ask?

What’s the backstory? Of all the things you could be building, why this??

“I really want to know why the founder’s working on this specific problem. This question helps evaluate their motivation for starting a company and founder/market fit. It’s also an opportunity to hear their story. I pitched Product Hunt countless times, to investors, future teammates, press, and others. Storytelling is an important skill for founders, crucial for fundraising, recruiting, and selling in general.” — Ryan Hoover, Weekend Fund

How did you get to this idea? What ideas were you exploring before this??

“As a former founder, we all know that it’s not always a straightforward path to starting a company. Often founders will tell a linear story about how the idea came about, but hearing their narrative and also any previous ideas the founder thought about working on is helpful in revealing the actual story. It’s also helpful to know if the ideas they explored working on are in the same space as the current company they’re pitching.” — Karine Hsu, Slope Fund?

Tell me about yourself.

“On the backstory, I keep it super open-ended 'tell me about yourself. What they decide to talk about says a lot about them. What matters most to them, what is their personality like, what is their ability to lead, how much they talk about their teams.” — Investor at multi-stage fund

Who do you admire and why?

“One of the best ways I’ve found to judge a person’s character is by asking them who they admire and why.” — Jonathon Triest, Ludlow Ventures?

How did you meet and how do you split up responsibilities?

"With two or more co-founders, I’m looking for complementary skills and role clarity. Ideally, there is at least one technical co-founder. If both co-founders are engineers, then I am looking for who will be leading as CEO which longer-term involves skills like sales, fundraising, recruiting, communication, board management, and general people leadership. Many engineers are great at this but some really dislike the commercial side of building the business so I'm looking for a complimentary balance of GTM and technical capabilities with the founding team.” — Sarah Smith, angel investor and ex-Partner at Bain Capital Ventures?

Tell me about the team? How did you find your first hires? Is your team diverse? If not, why not? (if the company is >3 people)

“When a founding team doesn't think about diversity from the beginning, it's incredibly hard to fix this later. It is quite common and okay to recruit friends and former colleagues for the first 4-6 people in the company but to scale, the founders have to be able to recruit outside their immediate networks. I'm looking for their motivation and ability to bring talent onboard, and if they’re intentional about creating an inclusive culture. A diverse team before reaching ~10 people sets up that foundation. If they are struggling with this, I invite them to chat more about it to see if I can help them with their recruiting approach.” — Sarah Smith, angel investor, and ex-Partner at Bain Capital Ventures

Who are your top hires? Who’s already in the pipeline?

“This question helps us understand how the founder thinks about building out the team. A strong team is such a competitive advantage in the early days that hearing how the founder approaches recruiting and what specific people they have in their pipeline demonstrates strong initiative.” — Karine Hsu, Slope Fund

How did the core team come together, including the founders? What will the team need to look like and evolve into as milestones are achieved? — Arjun Sethi, Tribe Capital

What to look for

• Have the founders done impressive things? Impressive things can come from anywhere, not just the founders’ “professional” experience.?
• Can you see yourself working for this founder??
• Do the founders seem unstoppable? Can you see them taking over an industry?
• Are they strong communicators? Can you see this founder convincing other investors, employees, and customers to come onboard??
• How convinced is the founder of their own success??
• Can you see the founders working on this for 10+ years??
• Can I imagine myself spending a lot of time with this team??

Problem, target customer, and GTM

Good startup ideas are built on solving real problems. By asking the right questions, you can identify problems worth solving, which are usually a function of their?popularity, intensity, frequency, and urgency .

Founders should be able to clearly state the problem, who has that problem (and the specifics of how the problem impacts them), and how they plan to reach them. Asking good questions helps evaluate the founder’s depth of understanding of these topics. The best questions should reveal “aha!” moments.?

Questions to ask

What is the specific problem you are solving?

“Although a lot can change about a business as it evolves, the founder having a deep understanding of the problem they think they’re solving is really important. This can come from doing thorough customer development and/or having a background/domain knowledge about the problem first-hand. Even if a company is pre-revenue or pre-product, having a detailed understanding of the problem will determine the decisions they make around what to build in order to solve the problem, how to position themselves in the market, and almost everything else.

Here's an example of a good vs perfunctory understanding of the problem:?

? Perfunctory: ‘Dog owners have dogs who are hungry. We make dog food.’

? Detailed understanding: ‘Dog owners, who are busy professionals, and have no time to go to the pet store to buy dog food are looking for nutritious, real food for their dogs. They need dog food that is made from real meat and is fortified with ABC nutrients and is delivered on a specific cadence.’” — Elizabeth Yin, Hustle Fund

Who has this problem?

“Similar to understanding the detailed problem, it's important to understand who the customer is in detail.?What is the day-in-a-life of that person??

? Perfunctory: ‘We sell to women ages 25-45.’?

? Detailed understanding: ‘We sell to women who work 80 hours per week in banking or consulting and have no children.’” — Elizabeth Yin, Hustle Fund

Who is your customer?

“So much of business success is dependent on who you are selling to. If they are old-school SMBs (eg senior living facilities) you will have a hard time getting anyone to pay attention or adopt new tech. If it’s a tech employee with a burning need, much easier. You want to find a market that is big, with major pain, with enough early adopters” — Lenny Rachitsky, angel investor?

What's the key insight about your user that led you to build this business? — James Currier, NFX

Who, exactly, do you sell to, and what words do you use to make them want your product? — James Currier, NFX?

How are you planning to acquire users?

“I ask this to get a feel for how much thought they’ve put into GTM, as that’s often the thing that kills startups early on—not being able to get to your potential users efficiently. You both don’t want them to have too little insight, but also too much. Some founders have pages and pages of GTM strategy which I find is often a distraction from actually launching the thing.” — Lenny Rachitsky, angel investor

How do you think about distribution, vertically or horizontally?

“This is the most critical question I care about, to tell me how they are thinking about go-to-market. I’m looking to understand how they’re thinking about both vertical distribution (same area of focus, different products) and horizontal distribution (one product, different uses).” — Arjun Sethi, Tribe Capital

What to look for

• How deeply do they understand the problem? How specific is the problem they’re solving?
• Do a lot of people have this problem? If not, will a lot of people have this problem in the future as the result of an underlying shift??
• Is this an intense, frequent, and urgent problem for their customers? If not, will it be in the future??
• Do they have lots of ideas on how to acquire users? Are they testing, learning from, and iterating on ideas on how to acquire users??
• Do they have any insights or advantages they can use to acquire users??

Their solution and why it’s better?

After identifying a meaningful problem, successful startups build a solution that solves that problem in a fundamentally new or better way. The key is to understand how their solution compares to existing options and if it’s a “10x” improvement for their customer.

Asking founders good questions about their solution, why it’s better and what insights led to its creation can help you identify this.?

Questions to ask

What does the user journey look like? Can you share a demo?

“If a picture is worth a thousand words, a demo is worth a million words. We ask founders to show what they’ve built and talk us through the user journey. It doesn’t have to be a polished product – early, ugly MVPs are fine. Our goal is to get inside the product mind of the founder. During the demo, we politely interrupt founders with questions to understand their thought process, even for seemingly small details (because they matter).” — Ryan Hoover, Weekend Fund

Can you explain your design choices from user insights all the way down to technical implementation??

“I'm looking to understand if the founder has a "full-stack" understanding of their solution from technical implementation details all the way to user insights.” — Alok Vasudev, Standard Crypto

What’s the ideal outcome for your customer? What KPIs is your customer trying to move?

“We have a bias toward products that solve a specific problem or achieve a specific goal. Founders should be able to answer this question with specifics and a clear understanding of the motivation of their customer. Founders that respond with a long list of value props often signal a lack of focus or poor understanding of the problem or priorities of their customers.” — Ryan Hoover, Weekend Fund

What is the “before and after” for customers using this solution?

“We’re looking to understand the dimension along which the solution is better for customers (e.g. it saves 10 hours/week) and if it’s dramatically better.” — Vedika Jain, Weekend Fund

What differentiates your solution from alternatives?

“Differentiation is super important, especially for a smaller fund like mine at Hustle Fund. Unfortunately, as a founder, you often don't know what other startups are getting started. So, you don't know if you're differentiated. One of the reasons differentiation is so important is that in crowded spaces, customer acquisition costs go up. E.g. if you're taking out ads, the price of the ad goes up. If you're cold-emailing, the price of attention goes up. Etc. In addition, many investors may have already backed something similar in a crowded space, so that's less capital that is available. Crowded spaces have a doubly whammy — the cost of acquisition is high and the available capital is low. That's not to say you can't form a successful company in a crowded space — the 1,000th CRM still can be a good business for a business owner. But, it makes it hard for VCs to get involved.” — Elizabeth Yin, Hustle Fund

Can you describe the history of this idea and how it builds on prior attempts to solve this problem?

“I'm looking to understand if the founder has a deep level of familiarity with past attempts to solve this problem, and learn more about the founders’ take on those attempts. It can also surface what has changed to enable this attempt to succeed now.” — Alok Vasudev, Standard Crypto

What to look for

• Is the solution fundamentally new or 10x better for customers? Note: Solutions that are 10x better along a specific dimension often “undershoot” along other dimensions initially, and “catch up” over time.?
• Are early users intensely using the product?
• Is the solution good enough that customers are telling others about it??
• If a product exists, is it thoughtfully built? Do they care about the details??
• Does the founder have a “full stack" understanding of their solution??

Progress and traction

Successful startups execute. By asking the right questions, you can understand if a team moves quickly and decisively and if they’re able to get things done. This is very important as one of the primary advantages startups have against bigger companies is speed.?

The metrics that founders use to demonstrate traction can be an additional signal. Metrics should be meaningful for the problem they’re solving and the value they’re providing customers.?

Questions to ask

What have you made happen so far?

“It’s important to note that this doesn’t mean revenue. It could be recruiting a team, doing early customer development, etc.” — Sheel Mohnot, BTV?

What have your biggest learnings been so far? How did you learn them??

“This question helps us identify how quickly a team is able to learn by doing. We’re looking for how impactful, non-obvious, and “earned” learnings are.” — Vedika Jain, Weekend Fund

Tell me about your first few customers (or pilots). How did you find them and how did you get them to say yes?

“I'm curious to hear about how the founders approach sales from opening doors to negotiating terms and closing a deal. Most companies start with founder-led sales so typically initial contracts come from an existing network of buyers they know, from their reputation as a domain expert, or from classic cold outreach. Overall, I'm looking to understand how energizing (or depleting) they find sales, why customers are excited about their product, and whether they have something a customer will pay for, even at the MVP stage. For consumer companies, the focus is similar but on distribution mechanisms, ideally proprietary ones that are hard to replicate.” — Sarah Smith, Angel Investor and ex-Partner at Bain Capital Ventures?

What does engagement look like? How are people using the product?

“We ask this question to evaluate their product/market fit and the founder’s grasp of their own metrics. It’s a red flag if the founder doesn’t have answers to basic KPIs as it signals a lack of data-driven thinking. Ideally, the founder can share numbers from memory and share success stories of how their product has been used (specific examples make this concrete).” — Ryan Hoover, Weekend Fund

What to look for

• How fast do founders put their ideas into action??
• How quickly do founders improve?
• Does the founder have a strong grasp of their metrics?

Underlying shifts, trends and timing

The biggest companies ride the waves of shifts in technology, consumer behavior, culture, or regulations. By asking the right questions, you can identify if they have wind in their sails.

The key is to identify if the company is building upon a real vs. fake trend. Sam Altman touches on?this :

“The best companies tend to have the courage to lead the market by a couple of years, but they know the secret for telling the difference between a real trend and a fake trend.?For a real trend, even if there aren’t many users, they use the new platform a lot and love it.”

Questions to ask

What has changed in technology that makes this possible only now? — James Currier, NFX?

What makes the timing right for this company to succeed now?

“At Weekend Fund, we invest in early-stage companies capitalizing on consumer behavior, technology, or regulatory shifts. We take the ‘why now?’ question seriously and find it difficult to back founders that cannot articulate an answer to this question. If nothing has changed and the problem is severe, there’s usually a strong incumbent (or several) or the business opportunity isn’t actually that big.” — Ryan Hoover, Weekend Fund

What to look for

• Does the timing feel right for this company to succeed now??
• Are the underlying trends in their favor? It’s much easier to sell into a growing market than a declining one, and build a successful startup as a result of it?
• Are they building on real trends or fake ones??

Insights?

The most valuable companies are built on insights. These are unfair advantages that explain why a company is special and why they’re likely to succeed. By asking the right questions, you can identify what insights a company is capitalizing on and their level of insight.?

Questions to ask

What do you uniquely understand about this space that others don’t?

“It’s helpful for us to hear how founders think their unique insight is. At the early stages, it’s unlikely that they are the only ones building in the space (especially if it’s a large market). These small differences in perspective compared to their competitors often are the key drivers to success and help us get a sense of how their product and differentiation will play out over time.” — Karine Hsu, Slope Fund?

What to look for

• How unique is their insight? Thought experiment: If you walked into a room with other founders building in the space, and shared their insight, would some founders disagree? If it’s obvious, it’s likely not an insight.?
• How impactful is their insight??

Big vision and biggest risks

Given that power law returns dominate in venture capital, most investors are looking for companies that have the potential to achieve a $10B+ exit.?

Some companies are building for existing, large, often underserved markets that make estimating market size more straightforward. Some are building for a more nascent, potentially smaller market today with the bet that it will grow rapidly. Some of the most valuable technology companies are able to grow the market. In both cases, strong founders should have a clear vision of the future they’re building and justification for the size of the opportunity, and risks ahead.

In both cases, founders should be able to convince investors that they’re building for a large enough opportunity to achieve venture-scale returns, and what the biggest risks are.?

Questions to ask

What do you think has to go right for this to be a massive outcome?

“This gets to the heart of what keeps the founders up at night. They’ve been thinking about the risks in the business more than anyone else (or should be), so it’s important to understand if they’re able to distill that into a single risk. I’m looking to understand:

? If I agree with them

? Zoomed-out view: How they zoom out and think about the ‘tectonic’ issues for their business (is it regulatory? product? team building?)?

? Zoomed-in view: What the zoomed-in actions they take day to day impact the (theoretically) most important thing for their business to succeed in the long-term.” — Kevin Carter, Night Capital

How does the world change when you are successful? — James Currier, NFX?

If you were an investor writing a deal memo about your company, what would you say are the biggest risks involved in this company succeeding?

“I find it useful to ask the founder to try and take themselves out of the day-to-day and see how they look at the company from afar – and in the process, learn about what they see as the biggest execution risks in their model. Most times I learn something pretty insightful that wasn't revealed otherwise. It's also a good ego test. Sometimes founders respond saying ‘there are zero risks’ – and that usually indicates a lack of awareness to us.” — Ankur Nagpal, Vibe Capital

What are the biggest risks to the business succeeding?

“I ask this because it gives you a good sense for how clearly they see the journey ahead. It’s hard to know how right there really are, but you can usually tell if they’ve put a lot of thought into it or they haven’t thought very far ahead.” — Lenny Rachitsky, angel investor

How does your business get bigger as it gets stronger?

"Network effects are one of the most powerful forces in technology. Many of the world’s most valuable technologies and technology companies are governed by network effects. This question gives us insight into whether network effects play a role in this company. Network effects are only one form of compounding value-creation. There are other ways companies can get stronger as they get bigger - economies of scale, brand, etc.” — Vedika Jain, Weekend Fund

What to look for?

• Is this going to be a $10B+ outcome if it works??
• Does the business have a compounding advantage over time?
• Do founders have an understanding of the biggest risks??
• Do founders have a multi-year plan that takes into account different versions of the future??

Fundraise

It’s important to note how much founders are raising, the terms (if set), and what the status of the raise is. Additionally, asking for their timeline helps investors understand how much time they have to make a decision.?

In addition, it can also be helpful to ask what their plan is for the money raised (and what milestones they’re looking to achieve), what they’re looking for in investors and how they’re thinking about future fundraising.?

Questions to ask

How much do you want to raise, and what milestone do you want to hit?“

Through this, I’m trying to understand what is the one thing they care about before the next round of funding as well as what does the next round of capital look like?” — Arjun Sethi, Tribe Capital

How much are you raising, what are the terms, and what’s the status?

“If we don’t have this information upfront, we end the call with this question to ensure that there’s enough room for us to write a meaningful check, that we’re directionally aligned on a fair valuation, and to understand how much time we have for diligence.” — Ryan Hoover, Weekend Fund

What is the status of your raise and what does your dream cap table look like? If you could add strategic angels, who would be ideal?

“Because I'm writing a collaborative check, I may spend more time on this than others. I'm listening for how well they understand the process of fundraising. While this is learnable if all goes well and pre-seed and seed, they will likely be raising many more times. The better founders understand the dynamics around leads, co-leads, dilution, forming a board, and the capital needed to achieve their goals, the better prepared they will be to complete a successful fundraise. I also make sure to encourage a diverse cap table, especially if I notice they have mainly been speaking with white male GPs and angels.” — Sarah Smith, Angel Investor and ex-Partner at Bain Capital Ventures?

What to look for

• Do the terms feel fair??
• Does the available allocation meet your desired check size??
• Are they thinking about bringing on investors that can give them an advantage??
• Can you be helpful in introducing them to other investors? This can often be the fastest way investors can add value.?
• Does the founder have a clear plan for the money raised?

If you’re a new fund manager, thinking of starting a fund, or just curious, subscribe to?Signature Block ?if you haven’t already.

Lastly, let us know what topic you’d like us to cover in the next edition.?

Until next time,

Ryan ?and?Vedika ?from?Weekend Fund ?:)

P.S. Read this next: How to say “no”: A guide to passing